# Value of a company

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What is the approximate value of a company that earns $5 this year if you wish to earn a 10% return and the companys earnings are expected to grow at 5%?

a. $50

b. $75

c. $100

d. $150

What is the approx value of a company that earns $5.00 this year if you wish to earn a 10% return and the company's earnings are expected to decline by 3% per year?

a. $0

b. $38.50

c. $50

d. $61.33.

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The solution explains how to calculate the value of a company.

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1. Use the constant growth formula to calculate the value. The value of the ...

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